It's unfortunate news for Greek-food connoisseurs in San Diego but Daphne's Greek Cafe might be headed for insolvency. The cafe filed for Chapter 11bankruptcy earlier this month. Despite the bankruptcy petition, Daphne's will continue to operate its 16 San Diego area locations.

For over a year, Daphne's parent company, Fili Enterprises, owned by former pro-soccer player George Katakalidis, has been working unsuccessfully on debt negotiation with the prospect of restructuring some of their obligations. Due to a specific term in the loan contract, however, Daphne's was in violation of their loan rules and thus, was found by the lender to be in breach of the terms.

Although this might be an aggressive move by Daphne's to negotiate their debt, it may be the smartest move in these desolate economic times, especially since Daphne's petition to the U.S. Bankruptcy Court in San Diego estimates the company's creditors between 1,000 and 5,000.

What exactly does a Chapter 11 mean for Daphne's? When the term "Bankruptcy" comes to mind, it usually brings to thought the notion that a business is closing.

Not so, in the case of Daphne's. In the case of small business bankruptcy, a Chapter 11 bankruptcy is simply a more aggressive means to reorganize settle debt. It is sometimes called a rehabilitation bankruptcy. It is an attempt, under the supervision of the Bankruptcy Trustee, to reorganize the business and to re-emerge as a healthy organization.

If, however, the debts are not negotiated successfully pending the Chapter 11, the organization might have to declare insolvency and file for a Chapter 7, which is a liquidation bankruptcy.

Either way, the news is not totally bad for tzaziki-lovers. Daphne's might emerge from this bankruptcy in better shape than it has been for years.

Sometimes, bankruptcy may just be the smartest business decision.

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